12 notes on the impact of the Coronavirus by Goldman Sachs

stock market graph
Source: Yahoo! Finance | Statista.com

The Feb. 28, 2020 episode of the Exchanges at Goldman Sacks podcast was obviously dedicated to the Coronavirus and the impact it’s having on markets. Here are some things I feel are worth noting down:

2/ Monday was the worst day for the S&P in over 2 years

3/ China represents 17% of global GDP which is 6 times bigger than it was during the SARS outbreak in 2003

4/ Sales into China for US corporates are at around 2% of S&P revenue exposure so the impact of the virus is affecting mainly the supply chain

5/ 37% of S&P management teams mentioned Coronavirus in the latest quarterly earnings calls

6/ In recent history pullbacks in the S&P have been short lived so everyone is getting ready to buy high quality S&P companies

7/ On average the S&P pulls back 12% in any calendar year so what happened so far is not dramatic

8/ Gold has been in steady upward trend since last year and it just broke $1600 per ounce

9/ Gold is used by investors for safety in relation to the Coronavirus outbreak but also due to scarcity of safe heaven assets given how low sovereign rates are globally

10/ The yield gap (equities-bonds) has moved well above 4% so equities remain attractively valued relative to bonds regardless of P/E ratios

11/ It is very challenging to get good returns in the public market outside of equities right now (investors use the keyword “TINA” — There Is No Alternative)

12/ Goldman has lowered expectations for the S&P and the VIX index that monitors investor expectation for volatility shot to almost double it’s normal rate this week

Always learning. 2x founder. 1x VC-backed. akislaopodis.com

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